Is the Royce Global Financial Services Service Class (RYFSX) a solid mutual fund choice right now?

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IIf investors are looking at the fund class Mutual Fund Stock Report, be sure not to go through Royce Global Financial Services Service Class (RYFSX). RYFSX holds a Zacks Mutual Fund Rank of 5 (strong sell), which is based on nine predictor factors such as size, cost and past performance.

Fund/manager history

Royce Funds is based in New York, NY, and is the manager of RYFSX. Since Royce Global Financial Services Service Class debuted in January 2004, RYFSX has accumulated over $21.99 million in assets. The current fund manager, Charles M. Royce, has been in charge of the fund since January 2004.

Performance

Investors are naturally looking for high performance funds. RYFSX has a 5-year annualized total return of 8.18% and is in the middle third among its peers in the category. If you’re interested in shorter timeframes, don’t discount the fund’s 3-year annualized total return of 10.34%, which puts it in the middle third over that time frame.

When looking at a fund’s performance, it’s also important to note the standard deviation of returns. The lower the standard deviation, the less volatility the fund experiences. The standard deviation of RYFSX over the past three years is 22.32% compared to the category average of 20.74%. Looking back over the last 5 years, the standard deviation of the fund is 19.23% compared to the category average of 18.04%. This makes the fund more volatile than its peers over the past half-decade.

Risk factors

Investors should note that the fund has a 5-year beta of 1.06, which means it is hypothetically more volatile than the market as a whole. Alpha is an additional metric to consider, as it represents the performance of a portfolio on a risk-adjusted basis relative to a benchmark, which in this case is the S&P 500. The 5-year performance of RYFSX produced a negative alpha of -4.78, meaning managers in this portfolio struggle to pick stocks that generate returns above the benchmark.

Expenses

Costs are increasingly important for investing in mutual funds, especially as competition intensifies in this market. And all other things being equal, a lower-cost product will outperform its otherwise identical counterpart, so it’s essential for investors to take a closer look at these metrics. In terms of fees, RYFSX is a no-load fund. It has an expense ratio of 1.49% compared to the category average of 1.45%. Looking at the fund from a cost perspective, RYFSX is actually more expensive than its peers.

Investors should also note that the minimum initial investment for the product is $2,000 and each subsequent investment must be $50.

Conclusion

Overall, the Royce Global Financial Services Service Class (RYFSX) has a low ranking for Zacks Mutual Funds and, in conjunction with its relatively similar performance, average downside risk and higher fees, this fund seems like a potential bad choice for investors right now.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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